nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒09‒28
fifteen papers chosen by
Roger Fouquet
London School of Economics

  1. An overview of CO2 cost pass-through to electricity prices in Europe. By Jouvet, Pierre-André; Solier, Boris
  2. The Dynamic Effects of Crude Oil and Natural Gas Prices on Iran's Methanol By Delavari, Majid; Gandali Alikhani, Nadiya
  3. Libya: Selected Issues By International Monetary Fund. Middle East and Central Asia Dept.
  4. Appendix to "A Spatial Approach to Energy Economics" By M. Scott Taylor; Juan Moreno Cruz
  5. EU ETS Phase 3 benchmarks: Implications and potential flaws By Stephen Lecourt
  6. Modified Ramsey Discounting for Climate Change By Richard S.J. Tol
  7. Efficiency and equity implications of oil windfalls in Brazil By Jorgensen, Ole Hagen
  8. Does Energy Consumption Volatility Affect Real GDP Volatility? An Empirical Analysis for the UK By Rashid , Abdul; Kocaaslan, Ozge Kandemir
  9. Empirical Analysis of Biomass and Energy Price Volatility By Kristöfel, Christa; Morawetz, Ulrich; Schmid, Erwin
  10. Corruption, Entry and Pollution By Eleni Stathopoulou; Dimitrios Varvarigos
  11. La politique d’innovation chinoise face au défi de la transition énergétique China's innovation policy and the challenge of energy transition: the case of photovoltaic and wind turbine industries By Zeting LIU
  12. What do Environmental and Resource Economists Think? Results from a Survey of AERE Members By Timothy C. Haab; John C. Whitehead
  13. Ranking Distributions of Environmental Outcomes Across Population Groups By Glenn Sheriff; Kelly B. Maguire
  14. Investing Volatile Oil Revenues in Capital-Scarce Economies: An Application to Angola By Christine J. Richmond; Irene Yackovlev; Shu-Chun S. Yang
  15. Fracking, globale Energiemärkte und die zukünftige Klimapolitik By Delzeit, Ruth; Klepper, Gernot; Lange, Mareike

  1. By: Jouvet, Pierre-André; Solier, Boris
    Abstract: This paper investigates the link between wholesale electricity prices in Europe and the CO2 cost, i.e. the price of European Union Allowances (EUAs), over the two first phases of the European Union Emissions Trading Scheme (EU ETS). We set up a theoretical framework and an empirical model to estimate to what extent daily fluctuations of CO2 costs may have impacted electricity prices. Regarding estimation results for the first phase of the EU ETS, about 42% of estimated pass-through rates appear to be statistically significant, while only one third of them are statistically different from zero in the second phase. We try to improve those results by proposing alternative estimates based on the EU ETS compliance periods.
    Keywords: European Union Emissions Trading Scheme; EU ETS; spot markets;
    JEL: L94 G1 C58 C22
    Date: 2013–10
  2. By: Delavari, Majid; Gandali Alikhani, Nadiya
    Abstract: Petroleum and petrochemicals prices movements have always been at the core of economic research agenda not only because of its crucial effect on the cash flows of oil-related businesses, but also due to the far-reaching implications of oil price uncertainty on the macro-economy and the financial markets. It is not surprising therefore that in the energy economics literature there is a plethora of empirical studies examining the issue of modeling movements and risk management. As a case study, this paper investigates the dynamic relationship between Iran’s crude oil price, natural gas price and methanol price which is one of the most important non-oil exports of the oil-exporting country. To do so, the weekly data from first week of 2005:1 to the third week 2013:5 in a VECM framework is applied. The results show that in the long-run, oil and gas prices hikes leads to proportional increase in methanol price while in the short-run, this impact is not significant.
    Keywords: Methanol Price; Crude Oil Price; Natural Gas Price; VECM Model
    JEL: C13 C32 Q43
    Date: 2013–01–12
  3. By: International Monetary Fund. Middle East and Central Asia Dept.
    Keywords: Energy prices;Oil prices;Subsidies;Energy sector;Fiscal reforms;Selected issues;Libya;
    Date: 2013–05–31
  4. By: M. Scott Taylor (University of Calgary); Juan Moreno Cruz
    Date: 2013–08–15
  5. By: Stephen Lecourt
    Abstract: In its third Phase (2013-20), the European Union Emissions Trading Scheme allocation methodology is shifting from grandfathering to a combination of auctioning and benchmarking. Free allocation is now be devoted to non-electricity generators only (save exemption), and is linearly decreasing throughout the Phase with a view of no free allocation in 2027. Benchmark-based free allocation is meant to reward lowest CO2-intensive installations as opposed to grandfathering, which allocated allowances based on historical emissions levels. This policy note describes the concrete implications involved by this shift in allocation methodology, and addresses the potential flaws of benchmarking-based allocation, using data from French nstallations’ Phase 3 provisional free allocation.
    Keywords: EU ETS, Benchmarks, Preliminary amounts, Carbon leakage, Historical Activity Level
    Date: 2013
  6. By: Richard S.J. Tol (Department of Economics, University of Sussex; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands; Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands; Tinbergen Institute, Amsterdam, The Netherlands)
    Abstract: The Ramsey rule for the consumption rate of discount assumes a transfer of money of a (representative) agent at one point in time to the same agent at another point in time. Climate policy (implicitly) transfers money not just over time but also between agents. I propose three alternative modifications of the Ramsey rule to account for this. Taking the Ramsey rule as given, I derive an intuitively clear but ad hoc modification. Using the assumptions underlying the Ramsey rule, I derive a consistent but more elaborate modification. If the discount rate is differentiated by victim, the consistent modified Ramsey rule is simpler and identical to regional equity weights. I apply the modified Ramsey rules to estimates of the marginal damage costs of carbon dioxide emissions. The results confirm that optimal climate policy has differentiated carbon taxes. Results also show that the standard Ramsey rule drastically underestimates the social cost of carbon.
    Keywords: Climate change, social cost of carbon, discount rate, Ramsey rule, equity
    JEL: H43 D63 Q54
    Date: 2013–09
  7. By: Jorgensen, Ole Hagen
    Abstract: Large oil reserves off the coast of Brazil may substantially increase the country’s oil revenue in the future. A natural resource"curse"could be the consequence if an appropriate share of the oil revenue is not invested. This issue is addressed in this paper for Brazil both theoretically and empirically by focusing on (i) the efficient allocation of oil revenue between investment and consumption; and (ii) because it may be efficient to consume a certain share of the oil revenue, the distributional implications across generations of higher public consumption. The main finding is that, if the Pre-Salt oil revenue brings the aggregate oil revenue in Brazil above 10 percent of gross domestic product, there will be scope for consuming a certain share of it while still maintaining efficiency. But unless oil revenue reaches 10 percent or more of gross domestic product, then all of it should be invested in order for the economy to approach the efficient investment level. If oil revenue as a share of gross domestic product was 10 percent, then the achievable growth in gross domestic product could reach 9.0 percent. The distributional implications are positive for all generations, but vary across generations depending on how much of the oil revenue is invested. As a result, transfer policies could be adjusted to ensure equality in its distribution.
    Keywords: Economic Theory&Research,Debt Markets,Emerging Markets,Currencies and Exchange Rates,Investment and Investment Climate
    Date: 2013–09–01
  8. By: Rashid , Abdul; Kocaaslan, Ozge Kandemir
    Abstract: This paper empirically examines the relation between energy consumption volatility and unpredictable variations in real gross domestic product (GDP) in the UK. Estimating the Markov switching ARCH model we find a significant regime switching in the behavior of both energy consumption and GDP volatility. The results from the Markov regime-switching model show that the variability of energy consumption has a significant role to play in determining the behavior of GDP volatilities. Moreover, the results suggest that the impacts of unpredictable variations in energy consumption on GDP volatility are asymmetric, depending on the intensity of volatility. In particular, we find that while there is no significant contemporaneous relationship between energy consumption volatility and GDP volatility in the first (low-volatility) regime, GDP volatility is significantly positively related to the volatility of energy utilization in the second (high-volatility) regime.
    Keywords: energy consumption volatility; GDP volatility; asymmetry; Markov switching ARCH models; Markov regime switching models
    JEL: C22 E32
    Date: 2013–04–10
  9. By: Kristöfel, Christa; Morawetz, Ulrich; Schmid, Erwin
    Abstract: The current debate on biomass price volatility mainly refers to increased market dynamics and integration as well as renewable energy policy intervention. Higher price volatility leads to additional costs that are often shared and transmitted along the supply chain to the final consumers. We empirically analyze whether or not price volatility of woody biomass commodities has increased in recent years. Results indicate that the price volatility of some woody biomass commodities has increased, but it is still lower than of fossil fuels.
    Keywords: Price volatility, woody biomass, energy market, Demand and Price Analysis, Resource /Energy Economics and Policy, Risk and Uncertainty,
    Date: 2013
  10. By: Eleni Stathopoulou; Dimitrios Varvarigos
    Abstract: We model an economy where imperfectly competitive firms choose whether to employ a dirty technology and pay an emission tax or employ a clean technology and incur the cost of its adoption. Bureaucrats who are entrusted with the task of monitoring the emissions of each firm, are corruptible in the sense that they may accept bribes in order to mislead authorities on the firms’ actual emissions. Market entry is an important element in the relation between corruption and pollution. Particularly, the incidence of corruption increases the number of entrants in the market, while the bureaucrats’ incentives to be corrupt are higher in a market with more competitors. We find multiple equilibria where both corruption and pollution are either high or low.
    Keywords: Corruption; Pollution; Market entry
    JEL: L13 Q53 Q58
    Date: 2013–09
  11. By: Zeting LIU (CLERSE)
    Abstract: Après trente ans de croissance économique annuelle de 9,9 % en moyenne depuis les réformes économiques lancées en 1978, la Chine est devenue la deuxième puissance économique mondiale. Elle est également le premier émetteur de CO2 et consommateur énergétique et de matières premières. La dégradation environnementale impacte sur la vie de millions d’habitants dans les villes ainsi que dans le milieu rural et crée des conflits avec les pays limitrophes. Cette étude propose une nouvelle approche pour analyser les politiques chinoises en matière de la transition durable en appuyant sur les théories du système national d’innovation (SNI). En analysant les deux industries clés de la transition énergétique en Chine – le photovoltaïque et l’éolienne, nous montrons la force et les faiblesses de la politique pour promouvoir l’innovation verte en Chine. Ces analyses nous permettent de retenir l’hypothèse qu’une convergence des politiques industrielle, énergétique et d’innovation est en train d’émerger pour former une politique de la transition durable en Chine. After thirty years of annual economic growth of 9.9% since the economic reforms initiated in 1978, China has become the world’s second largest economy. It is also the largest emitter of CO2 and consumers of energy and raw materials. Environmental degradation in China affects the lives of millions of people, in the cities as well as in rural areas, and creates conflicts with neighboring countries. This study proposes a new approach to analyze Chinese sustainable transition policies based on the theories of the national innovation system (NIS). By studying the two key industries - the photovoltaic and the wind turbine - of the energy transition in China, we show the strength and weaknesses of Chinese policies to promote green innovation in the country. These analyzes allow us to retain the hypothesis of a convergence of industrial, energetic and innovation policies to form a policy of sustainable transition in China.
    Keywords: politique d’innovation, système d’innovation, industrie photovoltaïque, industrie éolienne, transition, Chine, innovation policy, system of innovation, photovoltaic industry, wind turbine industry
    JEL: O38 O13 O33 N75
    Date: 2013–09
  12. By: Timothy C. Haab; John C. Whitehead
    Abstract: In this paper we present results from an opinion survey of Association of Environmental and Resource Economists members concerning issues ranging from basic market failure propositions to current policy questions to environmental behavior. The topical issues considered span the discipline including air and water pollution, sustainability, fishery, forestry and energy economics. We use entropy analysis to determine issues where there is consensus and multivariate analysis of the determinants of opinions. We find that AERE members reach consensus on a number of items of opinion and there are a number of items for which consensus is more difficult to reach. We find that agreement with items of opinion is influenced by noneconomic factors: concern about the environment and natural resources, political ideology, gender, the number of children in the household and United States residence. Key Words:
    Date: 2013
  13. By: Glenn Sheriff; Kelly B. Maguire
    Abstract: This paper develops methods for evaluating distributional impacts of alternative environmental policies across demographic groups. The income inequality literature provides a natural methodological toolbox for comparing distributions of environmental outcomes. We show that the most commonly used inequality indexes, such as the Atkinson index, have theoretical properties that make them inappropriate for analyzing bads, like pollution, as opposed to goods, like income. We develop a transformation of the Atkinson index suitable for analyzing bad outcomes. We also show how the rarely used Kolm-Pollak index is particularly convenient for ranking distributions of both good and bad health and environmental outcomes. We demonstrate these methods in the context of emissions standards affecting indoor air quality.
    Keywords: environmental justice, distributional analysis, inequality indexes, Lorenz curves, benefit-cost analysis
    JEL: D61 D63 Q52 Q56
    Date: 2013–08
  14. By: Christine J. Richmond; Irene Yackovlev; Shu-Chun S. Yang
    Abstract: Natural resource revenues are an increasingly important financing source for public investment in many developing economies. Investing volatile resource revenues, however, may subject an economy to macroeconomic instability. This paper applies to Angola the fiscal framework developed in Berg et al. (forthcoming) that incorporates investment inefficiency and absorptive capacity constraints, often encountered in developing countries. The sustainable investing approach, which combines a stable fiscal regime with external savings, can convert resource wealth to development gains while maintaining economic stability. Stochastic simulations demonstrate how the framework can be used to inform allocations between capital spending and external savings when facing uncertain oil revenues. An overly aggressive investment scaling-up path could result in insufficient fiscal buffers when faced with negative oil price shocks. Consequently, investment progress can be interrupted, driving up the capital depreciation rate, undermining economic stability, and lowering the growth benefits of public investment.
    Keywords: Oil revenues;Angola;Public investment;Fiscal policy;Natural resources;Developing countries;Economic models;Angola, natural resource, public investment, resource-rich developing countries, DSGE models
    Date: 2013–06–12
  15. By: Delzeit, Ruth; Klepper, Gernot; Lange, Mareike
    Abstract: [Einleitung] Chancen und Risiken der Gewinnung von Erdgas oder -öl aus unkonventionellen Lagerstätten und das dabei zum Einsatz kommende Verfahren des Hydraulic Fracturing (Fracking, deutsch: aufbrechen) werden derzeit in der Politik und Öffentlichkeit intensiv diskutiert. Als unkonventionelle Erdgasvorkommen bezeichnet man schwerer zugängliche Vorkommen, deren Gas durch technische Maßnahmen in den Lagerstätten erst mobilisiert werden muss. Dafür wird mit sehr hohem Druck chemisch behandelte Flüssigkeit (Frack-Fluide) in dichte Gesteinsschichten gepresst, um die Schiefergasvorkommen zu fördern (NRW 2012). Im Mittelpunkt der öffentlichen Diskussion stehen der Zielkonflikt zwischen möglichen energiewirtschaftlichen und -politischen Vorteilen und den Risiken für Mensch und Umwelt. In den USA wird bereits seit einigen Jahren unkonventionelles Erdgas durch Fracking gefördert. Somit gibt es erste Erfahrungen über dessen Vor- und Nachteile. Befürworter der Nutzung der Fracking-Technologie weisen auf stark gesunkene Energiepreise in den USA hin und begründen damit die Reindustrialisierung der US-amerikanischen Industrie (SRU 2013). Ein weiterer Vorteil wird in der Verbesserung der Versorgungssicherheit durch heimische Energiequellen gesehen. Gegner der Nutzung der Fracking-Technologie warnen vor möglichen Risiken und lokalen Umweltauswirkungen. Zudem stellen sie die Langfristigkeit der Preissenkungen in Frage und warnen vor negativen Auswirkungen auf die Ziele der Klimapolitik sowie den Ausbau erneuerbarer Energien. Mit diesem Policy Brief tragen wir zu dieser Diskussion bei, indem wir Erdgas aus unkonventionellen Quellen anderen fossilen Energieträgern sowie erneuerbaren Energieträgern gegenüberstellen und hinsichtlich ihres Beitrags zur Energiewende, klimapolitischen Zielen und lokalen Umwelteffekten analysieren. Die Analyse baut auf einer Übersicht über globale, europäische und deutsche Potenziale und über die aktuelle Förderung auf. --
    Date: 2013

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